Pension fund performance - do you monitor yours, how is it doing, do you actively change it?

Uther said:
Agree with Hagar tbh. I'd say we have a more than moderate lifestyle on around 30k as a couple. Then again we don't live in London so that probably helps.
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Are the figures for Now or future?

We take home between us, what. 5k a month. And only 1k goes on mortgage. Another 1k is on expenses like CT etc.
So you can expect that by retirement that living expenses will probably hit 2k at least. So no saving paying off mortgage.

If base costs are 2k what else do you need? Probably at least 2k to hit that one holiday abroad thing, owning a car, meals out.

That's 48k for a couple. So really. I think those figures aren't too far off the mark

Obviously if you live like a hermit that could come right down. But that's no life really.



This basically means I doubt I'll be retiring. I'd certainly need that state pension to fully retire.


Then you think about the majority.
You think about there being no nhs.
You think about council tax rises year on year every year.
Retirement will soon be a luxury. And that's where boomer generation have it good.
 
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413x said:
Are the figures for Now or future?

We take home between us, what. 5k a month. And only 1k goes on mortgage. Another 1k is on expenses like CT etc.
So you can expect that by retirement that living expenses will probably hit 2k at least. So no saving paying off mortgage.

If base costs are 2k what else do you need? Probably at least 2k to hit that one holiday abroad thing, owning a car, meals out.

That's 48k for a couple. So really. I think those figures aren't too far off the mark

Obviously if you live like a hermit that could come right down. But that's no life really.



This basically means I doubt I'll be retiring. I'd certainly need that state pension to fully retire.


Then you think about the majority.
You think about there being no nhs.
You think about council tax rises year on year every year.
Retirement will soon be a luxury. And that's where boomer generation have it good.
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Afaik they are the figures they are saying you need today, with the CoL increases. If you have no mortgage, and no debts, then you don't, unless someone on a large salary has allowed a large amount of lifestyle creep.
Even on what we live on, we had a 2 week holiday abroad last year staying in nice hotels, and have a new car on order.
 
Uther said:
Afaik they are the figures they are saying you need today, with the CoL increases. If you have no mortgage, and no debts, then you don't, unless someone on a large salary has allowed a large amount of lifestyle creep.
Even on what we live on, we had a 2 week holiday abroad last year staying in nice hotels, and have a new car on order.
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If they are today, yeah I agree they are a bit headline grabby. Unless they include rent/mortgage.

I have a few vague plans for retirement.
1) A lot will depend on inheritance to be honest.
2) equity release/down pricing home.
3) hopefully working part time

Don't think there's any way to bridge the gap between say 60 and state pension age without that.

What will be hardest for me is burning through that cash at a rate that leaves as little as possible on death. With no kids to pass it on to, do not want to end up dying rich if possible
 
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413x said:
If they are today, yeah I agree they are a bit headline grabby. Unless they include rent/mortgage.

I have a few vague plans for retirement.
1) A lot will depend on inheritance to be honest.
2) equity release/down pricing home.
3) hopefully working part time

Don't think there's any way to bridge the gap between say 60 and state pension age without that.

What will be hardest for me is burning through that cash at a rate that leaves as little as possible on death. With no kids to pass it on to, do not want to end up dying rich if possible
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Think they are the figures without rent / mortgage, which is basically fear mongering imo.
 
when talking about pensions they always use today figures..
If you're retired already then that's how much you need, if you're not retired already then it's the equivalent of that amount today for the future. They assume that everyones pension pots will raise with inflation.
 
www.ft.com

UK pension funds lost £425bn in year of bond market crisis

Schemes registered a new quarter drop in asset value in 2022 driven by mini-Budget turmoil, finds Pensions Regulator
www.ft.com www.ft.com

Still a big believer in pensions but it’s Liz Anti-Truss I don’t believe in.

Looking at the vanguard bonds portfolio this morning, the US and the UK are the two biggest government bonds issuers by a long way. Maybe because people have faith in the governments or maybe it’s just shows how badly and debt ran the US and our country is.
 
NotAGolf said:
My current provider is The People's Pension. As others have mentioned, their fees are quite high and the fund options are limited. It looks as though they don't allow transfers out either, although I've emailed them to confirm this.
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I've finally heard back from the people's pension...

"We do not allow partial transfers from active pension fund (meaning, you are currently paying into.) We mention the word ‘usually’ as this can apply to some older schemes we used to offer.

If you do wish to proceed with a transfer, please get in touch and we can take you through the next steps. You would need to cancel this pension first."
 
slinxy said:
www.ft.com

UK pension funds lost £425bn in year of bond market crisis

Schemes registered a new quarter drop in asset value in 2022 driven by mini-Budget turmoil, finds Pensions Regulator
www.ft.com www.ft.com

Still a big believer in pensions but it’s Liz Anti-Truss I don’t believe in.

Looking at the vanguard bonds portfolio this morning, the US and the UK are the two biggest government bonds issuers by a long way. Maybe because people have faith in the governments or maybe it’s just shows how badly and debt ran the US and our country is.
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Vanguard bond fund is not indicative of the entire world debt.
 
Ive been researching bonds quite a lot given I have a decision to make about whether to keep them in my portfolio or not.

Over the past 20 or so years, bonds have acted as a hedge to equity, they were inversely correlated so that if equities went down, bonds went up and vice versa. So its been seen as a way to diversify.

But, in the time before that, bonds and the stock market were more positively correlated so they went up and down together. This makes them not really a diversification to equities.

It seems that the negative correlation of bonds and stocks has been linked to the period of low interest rates, which were an anomaly over the past 100 years. If interest rates are returning to what is considered more historically normal, it may be that bonds return to their historical trend as well. Also the bond crash in 2022 has been linked to high inflation, which is now hopefully subsiding. I saw one article that said that during periods of high inflation, the best diversification would be commodities. They are no commodity funds I can invest in in my pension scheme though.

It seems that long term (100+ year) returns in stocks has been in the order of 10% and in bonds in the order of 6%. Actually that is not too bad, as an 80/20 mix would net you about 9% on average.

https://barbarafriedbergpersonalfinance.com/historical-stock-and-bond-returns/
Over 50 years, from 1973 through 2022 stocks averaged 10.24% average annual returns while 10-year Treasury Bonds delivered 6.12% on average,
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So whilst stocks still outperform historically, it seems that if considering diversification it would still be sensible to hold bonds. As the past is no guarantee of future performance, who knows whether stocks will continue to outperform in future or whether the gap might close up. So on this basis I don't really understand why the recommendation is for 100% worldwide equities, because this would seem to be relying on the past performance of equities.
 
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danlightbulb said:
Ive been researching bonds quite a lot given I have a decision to make about whether to keep them in my portfolio or not.

Over the past 20 or so years, bonds have acted as a hedge to equity, they were inversely correlated so that if equities went down, bonds went up and vice versa. So its been seen as a way to diversify.

But, in the time before that, bonds and the stock market were more positively correlated so they went up and down together. This makes them not really a diversification to equities.

It seems that the negative correlation of bonds and stocks has been linked to the period of low interest rates, which were an anomaly over the past 100 years. If interest rates are returning to what is considered more historically normal, it may be that bonds return to their historical trend as well. Also the bond crash in 2022 has been linked to high inflation, which is now hopefully subsiding. I saw one article that said that during periods of high inflation, the best diversification would be commodities. They are no commodity funds I can invest in in my pension scheme though.

It seems that long term (100+ year) returns in stocks has been in the order of 10% and in bonds in the order of 6%. Actually that is not too bad, as an 80/20 mix would net you about 9% on average.

https://barbarafriedbergpersonalfinance.com/historical-stock-and-bond-returns/


So whilst stocks still outperform historically, it seems that if considering diversification it would still be sensible to hold bonds. As the past is no guarantee of future performance, who knows whether stocks will continue to outperform in future or whether the gap might close up. So on this basis I don't really understand why the recommendation is for 100% worldwide equities, because this would seem to be relying on the past performance of equities.
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Still think your overthinking it.

If your 20/25 years from potential retirement - 100% equities is medium/high risk but then offset by the timescale to retirement and fine to consider.

Gradually introduce bonds/debt etc as you get to 10-15 years from retirement etc.... to reduce the "risk"
 
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booyaka said:
Still think your overthinking it.

If your 20/25 years from potential retirement - 100% equities is medium/high risk but then offset by the timescale to retirement and fine to consider.

Gradually introduce bonds/debt etc as you get to 10-15 years from retirement etc.... to reduce the "risk"
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But what is 100% equities based on if not past performance?

And 2022 demonstrated that bonds is also high risk as well, with a massive bond crash that had never happened before in 100+ years of data history.

There's a piece of logic missing that Im not seeing.
 
danlightbulb said:
But what is 100% equities based on if not past performance?

And 2022 demonstrated that bonds is also high risk as well, with a massive bond crash that had never happened before in 100+ years of data history.

There's a piece of logic missing that Im not seeing.
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Long time frames, we expect the world economy to grow therefore equities should grow with it. Of course world trackers are really a bet on the US economy, in 20/25 years the debt situation over there is going to be calamitous so who knows what will happen. Many who switched to bonds just suffered a massive drawdown as interest rates risen quickly, so much depends on the circumstances of the day when you retire and the answer is rarely clear cut.
 
200sols said:
Long time frames, we expect the world economy to grow therefore equities should grow with it. Of course world trackers are really a bet on the US economy, in 20/25 years the debt situation over there is going to be calamitous so who knows what will happen. Many who switched to bonds just suffered a massive drawdown as interest rates risen quickly, so much depends on the circumstances of the day when you retire and the answer is rarely clear cut.
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Hmm, so past performance is no guarantee of future performance, except over long time frames when its then fine to assume it.

They never say the 2nd part do they...
 
200sols said:
Vanguard bond fund is not indicative of the entire world debt.
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No, but as it’s an ETF it’s a good indicator of the bonds that Joe Public and investment institutions are actually buying and not governments buying from each other.

danlightbulb said:
So whilst stocks still outperform historically, it seems that if considering diversification it would still be sensible to hold bonds. As the past is no guarantee of future performance, who knows whether stocks will continue to outperform in future or whether the gap might close up. So on this basis I don't really understand why the recommendation is for 100% worldwide equities, because this would seem to be relying on the past performance of equities.
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stocks should always outperform bonds, higher risk for higher rewards. The main advantage of having bonds in a self managed pension is that you can withdraw from the pot that’s least impacted.

Say you have a million pound pot 80 shares/20 bonds; using large numbers as it’s easier.

If the stock market drops 25% one year. Your shares in the pot will only be worth 600,000.

To get the 50k for the year to live on from that 600k you would have to sell 8.3% of your shares, but 8.3% of your original £800,00 pot is £66,400. So your losing out on an additional 16,400 and have less shares if/when the stock market recovers.

If you have a bond (200,000), you could use that to fund the 50k and sell the 50k of bonds, leaving your stocks alone to recover over time.

Depending on your age, you may be best to invest in shares first, as they will have more time to increase and compound. Then start buying bonds nearer to retirement. The ratio only matters when you start to take from the pot.

If you throw in REITs, gold and other assets, it covers you as you can always withdraw from the asset that’s least impacted.

Think of it like a farmer, if cows are selling well one year, sell the cows, if the pigs are treading, sell the pigs. Where you don’t want to be is only having cows and no one wanting cows, so you have to sell them cheap.

Rotty said:
At the time it had no noticeable effect, longer term it's hard to know what can be attributed to what
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I think mine dropped by 20%.. but that’s down to the value of the pound as well as bonds, as I have some money markets in my pension that relys on a steady fx rate for the pound.
 
slinxy said:
No, but as it’s an ETF it’s a good indicator of the bonds that Joe Public and investment institutions are actually buying and not governments buying from each other.
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Its not an indicator of world debt like you said, but you are right its an indicator of what the public want and typically UK people want UK 'stuff' and they also see US stuff as 'safe', why do you think vanguard has a UK tilt to most of its UK products? Because that is what the public want, however it isn't indicative of anything more than that.

As a rule, a countries share of the world bond market usually correlates with the size of its economy, so you'd expect the US to be top in that regard.
 
Rotty said:
At the time it had no noticeable effect, longer term it's hard to know what can be attributed to what
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You must have been signifcantly more fortunate than I
vfIQyMW.jpeg


Liz ****** things badly for me


-edited to remvoe personal info
 
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